… “taxpayer investment” was to bring solvency to two institutions that were simply “too big to fail.”
Nobody ever said anything about forcing the taxpayers to pay the legal bills of the political Fannie and Freddie executives who were key to creating the housing crisis. But that’s exactly what’s happening.
The New York Times broke the story:
Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress.
The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted. The legal payments show no sign of abating.
One of the crooked executives specifically referenced by the Times is none other than Franklin Raines, Bill Clinton’s former budget director, who took a job as Chairman and Chief Executive Officer of Fannie Mae from 1999 to 2004. Raines allegedly cooked the books at Fannie, issued countless dubious mortgages, and then took a huge bonus before leaving the company. He is one of three executives who divvied up a tidy $24.2 million from the taxpayers to defend themselves in court.
Raines’ tenure at Fannie Mae was marked by massive corruption and mismanagement. And we’re supposed to bail him out, too? Once again the taxpayers are thrust into an Alice in Wonderland world where the government uses tax dollars to help politicians defend against government investigations.
Of course this corrupt deal-making was a “closely guarded secret!” Fannie, Freddie and their friends in government knew the public would never knowingly get behind a bailout that would benefit the executives who got us into this financial mess. (Most Americans oppose the bailouts on principle alone – never mind the flagrant corruption.)
Now do you see why Judicial Watch is fighting so hard to bring transparency to the bailout process in general, and to the Fannie and Freddie deal specifically? In fact, one of our key investigations focuses upon Fannie and Freddie’s political contributions. Let’s face it. You don’t broker a deal like this without greasing a few palms in Washington, DC. We want names and we want amounts.
But the Obama administration has made the shocking claim that these documents aren’t FOIA-able. In fact, Obama administration lawyers have argued that no Fannie or Freddie documents are subject to disclosure to the American people under law (the Freedom of Information Act). It makes one wonder what other bombshells are they hiding in their files? (We know, for instance, that President Obama himself was a top recipient of political contributions from these two agencies.)
Another of our lines of inquiry, pursued on behalf of former FDIC and Federal Reserve employee Vern McKinley, involves the decision to place Fannie and Freddie under conservatorship in the first place.
Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System, described “the catastrophe that would occur if we did not take these actions” in a meeting with the boards of Fannie Mae and Freddie Mac.
This catastrophic scenario has never been explained to the American people. But I doubt appropriate punishment for the executives who got us into this mess represents the type of “catastrophe” requiring our tax dollars.
Again, this recent news is all the more reason for transparency from the Obama administration. And so far we’ve received nothing but stonewalling from the Obama Federal Housing Finance Agency (FHFA), the government agency that now runs Fannie and Freddie. (Click here to read more about our historic open records lawsuit.)
When asked why on earth the FHFA agreed to continue paying the legal fees for Fannie and Freddie executives, Edward J. DeMarco, acting Director of the FHFA, simply said in a statement, “I have concluded that the advancement of such fees is in the best interest of the conservatorship.” He provided no further explanation.
As the Times points out, there is no end in sight for these taxpayer-funded legal payments. So the Obama administration wants more money from you but doesn’t want to answer any of your questions about how or why it is being spent. That’s why Judicial Watch continues to fight so hard in court to get to the truth behind these bailouts.
More Air Pelosi News
Despite the media firestorm over her military travel abuses, Nancy Pelosi continued to use the United States Air Force as her own personal travel agency right up until her final days as House Speaker according to documents we uncovered from the Air Force.
According to these new documents, which we obtained through the Freedom of Information Act (FOIA), Pelosi used Air Force aircraft for 43 flights from January 1 to October 1, 2010. By comparison, Nancy Pelosi logged 47 flights in the previous nine-month period, April 1, 2009, to January 1, 2010, according to previous documents we uncovered.
So, in other words, she did not back off at all from her pattern of abuse.
Here’s a quick summary of what these documents include: a mission activity chart detailing all of former Speaker Pelosi’s flights January 1 to October 1, 2010, as well as detailed shopping lists for some flights, flight authorization forms, mission expense records and internal Air Force correspondence related to the flights.
And here are two quick highlights:
Pelosi used Air Force aircraft for a total of 43 trips, covering 90,155 miles, from January 1 through October 1, 2010. The Air Force documented in-flight expenses for 22 of these flights totaling $1,821.33. The Air Force did not provide expense information for the remaining 21 flights.
Former Speaker Pelosi received chocolate-covered strawberries as a birthday surprise on a March 26, 2010, flight. According to one internal Air Force email sent on March 25, 2010: “The speaker’s office is requesting egg salad sandwiches on wheat toast with fruit (watermelon, etc) for desert (sic). It’s the speaker’s B-Day tomorrow so we’re also asking for something like chocolate covered strawberries (dark chocolate preferred)…” The immediate response to the email from another member of the Air Force staff:
“Copy all. We’ll plan something for the birthday and take care of the meal.”
Judicial Watch was the first to expose this scandal, and all of you who support us deserve credit for helping us with the resources for this major investigation. We’ve uncovered some incredible details regarding Pelosi’s abuse of military travel, leading to a tremendous amount of press coverage on the scandal. (Our hard work certainly led to new Speaker John Boehner’s decision to fly commercial.)
You may recall, according to previous documents uncovered by Judicial Watch, Pelosi’s military travel cost the United States Air Force $2,100,744.59 over one two-year period — $101,429.14 of which was for in-flight expenses, including food and alcohol.
In fact, check out this purchase list from one Pelosi-led congressional delegation traveling from Washington, DC, through Tel Aviv, Israel to Baghdad, Iraq May 15-20, 2008: Johnny Walker Red scotch, Grey Goose vodka, E&J brandy, Baileys Irish Cream, Maker’s Mark whiskey, Courvoisier cognac, Bacardi Light rum, Jim Beam whiskey, Beefeater gin, Dewar’s scotch, Bombay Sapphire gin, Jack Daniel’s whiskey, Corona beer and several bottles of wine.
We also uncovered internal Department of Defense (DOD) email correspondence detailing attempts by DOD staff to accommodate Pelosi’s numerous requests for military escorts and military aircraft, as well as Pelosi’s last minute cancellations and changes. For example, in response to a series of requests for military aircraft, one Defense Department official wrote, “Any chance of politely querying [Pelosi’s team] if they really intend to do all of these or are they just picking every weekend?…[T]here’s no need to block every weekend ‘just in case’…” The email also notes that Pelosi's office had, “a history of canceling many of their past requests.”
And finally, we also uncovered emails from the DOD that show that the Pentagon worked hand-in-hand with congressional offices prior to releasing documents under the FOIA regarding congressional military travel. These “heads up” emails involved FOIA requests filed by Judicial Watch, The Wall Street Journal, Congressional Quarterly and Roll Call, among other organizations, related to the use of military aircraft by a number of congressional members, including Pelosi.
Nancy Pelosi demonstrated an alarming disregard for the men and women in the U.S. Air Force during her tenure as House Speaker. She may be gone from her previous position, and Speaker Boehner may have decided not to follow her corrupt example, but this scandal is not only about travel by the Speaker of the House.
Through the speaker’s office, other members of the House are able to obtain permission for the use of military luxury travel for congressional delegation trips abroad. These trips, known as CODELs, have exploded in number and cost. Speaker Boehner needs to reform this abuse of our military’s assets. This is the right thing to do for the U.S. Air Force and for the American taxpayer.
Office of Special Counsel:
Bush Officials Violated Electioneering Laws
The Office of Special Counsel (OSC) announced Monday that Bush administration officials engaged in illegal electioneering during the 2006 campaign, flying around the country on the taxpayers’ dime to plug Republican candidates.
According to The Washington Post:
At least seven Cabinet secretaries to President George W. Bush took politically motivated trips at taxpayer expense while aides falsely claimed they were traveling on official business, the independent Office of Special Counsel said Monday night in concluding a three-year probe.
In a report on allegations that first surfaced before Bush left office, the agency condemned what it depicted as widespread violations of a law restricting political activities by federal workers and illegal use of federal funds to engage in electioneering…
It’s actually much worse than that. According to the OSC report, staff members of the Republican National Committee actually moved into the Bush White House to coordinate the campaign activity! The improper activity was centered in the Bush White House Office of Political Affairs. (Apparently, Republicans were nervous about mid-term losses, and sent some of their heavy hitters to battleground states to try to influence the outcome of the elections. Their historic rout by Democrats that year shows the Republicans had good reason to be nervous.)
As the Post notes, “[w]hile White House officials may legally pursue close political contact with outsiders, the report said, ‘the systematic, partisan political activity described in this report, including strategically supplying targeted candidates with administration support to secure electoral gains, goes far beyond a need for political information [meant] to effectively advise the president.’” It turns out that the political operations office in the Bush White House ignored explicit instructions from the White House Counsel’s Office to schedule political campaign briefings for federal agency political appointees after regular office hours.
Such activity, the report concluded, is banned by the Hatch Act. (The Hatch Act, in its earliest incarnation, was named An Act to Prevent Pernicious Political Activities.)
Needless to say, this report (which you can read here) documents that political appointees throughout the Bush administration saw the law as no barrier to using tax dollars to subsidize Republican political activities Bush officials knew this activity violated the law, but they chose to do it anyway, in order to score political gains.
The White House Office of Political Affairs was created during the Carter presidency.
The OSC says illicit political activity by White House appointees seems to be par for the course across administrations. The OSC only investigated the recent Bush administration. The Obama administration has virtually no controls in place to prevent the continued misuse of tax dollars to fund politicking.
One former Bush official (and current U.S. Senator) vociferously objected to the OSC’s findings.
And to be fair, the law allows for political activity by certain officials in the White House, which can lead to confusion. The OSC approvingly quotes Richard W. Painter, a former lawyer from the Bush White House. Painter notes:
[C]oncurrent political and official roles put people in a position that is difficult and arguably untenable. Critics will blame Office of Political Affairs staff members and other officials who engage in political activity for poor ethical judgment when problems arise. These problems, however, may be inevitable if government officials continue to be asked to perform official and political roles concurrently. The public image of the White House and the rest of the government will suffer as a consequence.
The OSC can’t prosecute anyone who has departed government service, and it has been suggested that there was no criminal wrongdoing. The Obama Justice Department will not do anything for fear of calling attention to this administration’s corruption, which is ongoing.
For instance, when is the OSC (or the DOJ) going to pursue Judicial Watch’s complaint regarding a concerted effort by Obama officials to influence the 2010 mid-term elections by allegedly offering jobs to candidates they wanted to leave the campaign?
It’s been awhile since I’ve covered this, so here’s how we summarized the charge in our complaint, filed with the OSC in July 2010:
As widely reported in the media, White House chief of staff Rahm Emanuel and deputy chief of staff Jim Messina, on behalf of the Obama Administration, have both used their position and influence as highly placed federal employees to affect the outcome of federal elections in direct violation of the Hatch Act, which states that an employee may not “use his official authority or influence for the purpose of interfering with or affecting the result of an election.”
Emanuel reportedly enlisted the help of his old boss Bill Clinton to offer a job on a “Presidential or other Senior Executive Branch Advisory Board” to Pennsylvania Rep. Joe Sestak, who was then challenging Senator Arlen Specter in the Democrat primary. White House Counsel Robert Bauer admitted in a White House memo that this corrupt activity took place: “Efforts were made in June and July of 2009 to determine whether Congressman Sestak would be interested in service on a Presidential or other Senior Executive Branch Advisory Board, which would avoid a divisive Senate primary.” (The Obama White House preferred Specter.)
Meanwhile, Emanuel’s assistant, Jim Messina, allegedly called Colorado Senate candidate Andrew Romanoff, who was challenging Senator Steve Bennet for the Democratic nomination, and offered Romanoff several federal positions, including two with the U.S. Agency for International Development. When the scandal broke, Romanoff released to the press an email from Messina listing three jobs that “would be available” if Romanoff were not running for the Senate against Bennet. (The Obama White House preferred Bennet.)
In both cases the intent on the part of Emanuel and Messina was clear: to manipulate federal elections in two states by offering bribes to candidates they wanted out of their respective campaigns.
This activity is every bit as serious as the decision by the Bush White House to send cabinet officials out on the stump or brief political appointees on the 2006 congressional elections. It deserves the timely attention by OSC.
In fact, perhaps with the release of this report on Bush administration corruption, it’s a good time to contact the Office of Special Counsel directly and encourage it to act on Judicial Watch’s complaints regarding Sestak and Romanoff. Its Hatch Act Unit can be reached by phone at 1-800-85-HATCH.
(By the way…Emanuel — put back on the ballot by pliant judges on the Illinois Supreme Court — is running for Chicago mayor. Messina is now set to run President Obama’s reelection campaign.)
Lastly, this report helps expose the dirty truth that, no matter the administration (and no matter the party of the president), your tax dollars are misused every day trying to get politicians elected or reelected.
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Tom Fitton – President
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